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Can Trump Undertake Medicaid Overhaul Without Changing the Law?

Can Trump Undertake Medicaid Overhaul Without Changing The Law?

With healthcare reform changes dead on Capitol Hill for now, many are asking: Can the President essentially do Medicaid reform on his own using executive authority? The sheer mention of such sends shutters down the backs of advocates’ spines.

The short answer is Yes and No. And you know this blogger is never short, so here is the rather lengthy explanation.

In the Constitution, Congress is tasked with making laws and the President with implementing them. Seems simple enough, right? The reality is that the executive branch has sweeping ability, through the operation of government, to make and disseminate public policy. Often, laws created by Congress leave a great deal of policy to be fashioned by the executive branch. Not that it matters. Federal departments and agencies have significant regulatory authority that allows for policies to be set whether Congress agrees or not.

In this case, the Department of Health and Human Services (HHS) and the agency under it, the Centers for Medicare and Medicaid Policy (CMS), control the destiny of Medicare, Medicaid, the Exchanges, and countless other healthcare and human services programs nationwide.

Of concern to many is that former high-flying HHS Secretary Tom Price and current CMS Administrator Seema Verma had distinctly different views on healthcare and human services than traditional Republican appointees. Those appointed by the Bushes, for example, sought to do little in terms of remaking the entitlement nature of healthcare and at best tinkered on the fringes on the regulatory front. At first blush, the just named new HHS Secretary, Alex Azar, looks like a more traditional pick, having worked under Bush number two in the second position at HHS. But he, too, has a tight bond with Vice President Mike Pence, who seems to be placing his loyalists in agencies potentially to carry out conservative approaches. Indeed, Verma fashioned Pence’s Indiana Medicaid reform that included (heaven forbid!) minimal premiums and personal responsibility tenets.

As we have stated often, we think Congress should get the gumption to come together on a bipartisan basis to pass sweeping healthcare reform. Obamacare is far too generous and fiscally precarious to survive as a national model into the future. And while we support Medicaid as a lynchpin in our healthcare system to cover those with no or inconsistent access to employer-sponsored coverage, we have gone on record saying reform is needed to ensure its availability and viability for future generations. The program is relatively efficient in its delivery through a managed care model and could be made more so. We have said that a per capita cap program is needed, but it must be generous enough to do its job and ensure consistent coverage to Americans. It is not a question of decimating the funding basis, but controlling the growth of the program in the future. On Medicare, while we have not endorsed the move to a premium support model, we are open to it. We, too, are fans of the massive expansion of managed care as a way to root out fraud, control costs, and improve quality. Anything to get rid of the decrepit fee-for-service program in both Medicaid and Medicare.

Now, let’s assume Congress does not do its job to set a future policy roadmap for all of these programs in this or the next Congress. What Can Trump do on the Medicaid reform front? While he cannot legislate sweeping changes, he and his executive team can do many things. The law gives the administration significant waiver authority. At the request of states, the administration can actually set aside basic rules in favor of changes that save money and innovate. And remember, innovation is in the eyes of the beholder.

Most states today take advantage of the significant waiver authority to waive some rules – 1915(b) (Freedom of Choice) and (c) (Home and Community Based Services) come to mind. By and large, these are standard fare in the Medicaid world today and help states set up managed care programs without violating federal dictates as well as run home and community based waiver programs efficiently as an alternative to nursing home institutionalization. The more significant waiver authority, though, is what is known as the 1115 Demonstration waivers. In these cases, states can ask the HHS Secretary (through CMS) to approve projects that test policy innovations likely to further the objectives of the Medicaid program. Generally speaking, cost-effectiveness has to be proven as well.

Traditionally, 1115 was used by liberal administrations to expand benefits. Conversely, 1115 was used by conservative administrations to allow states to rein in benefits. The fear among healthcare advocates is that Trump will encourage states to use this broad authority he has on a massive scale to do the following:

  • Reduce the scope of benefits, substantially in many cases, for the population as a whole or for expansion populations
  • Break the inflexibility that exists in the law, at least in part, regarding mandatory populations and benefits and delivering coverage to everyone equally (even if you expand coverage to discretionary populations
  • Introduce cost-sharing for some or all of the population
  • Introduce personal responsibility into the program by penalizing bad healthcare behaviors (taking away benefits or increasing cost-sharing) or rewarding good ones (with reduced cost-sharing or giving additional benefits and perquisites)
  • Introduce work requirements (obviously excluding those who cannot physically do so)
  • Introduce drug and other testing as a requirement of coverage
  • Introduce time-limited coverage

The advocates are up in arms, arguing that healthcare is different from other human services programs and it is more akin to a right than a privilege. We are not wholly unsympathetic here. Conservatives argue that Medicaid is far-flung and states need to innovate to save money and ensure the program is used responsibly. We are very sympathetic here. Nearly a quarter of the population is now on Medicaid. That is a good thing and a bad thing. More people are covered, yet more people means fiscal Armageddon for the program in the future unless reformed.

While some would argue that the program should have stayed a true social safety net for the indigent, we think it can be a cost-effective vehicle for a broader population needing permanent or transitional coverage. Our support here is based on the notion that consistent coverage promotes quality and prevention, something that is needed to reduce costs and inflation over time. So we don’t support using 1115 to gut Medicaid and summarily kick people off the coverage rolls as some intend. But we also think that such waivers are important to transform the system as we await Congress’ intestinal fortitude to act in a responsible, coherent, and forward-looking way. There is nothing wrong with rationalizing the benefit, adding personal responsibility, and implementing reasonable cost-sharing. While heretical to some, time limits could even be considered for some. This blogger hails from a state that was an early adopter of welfare reform that showed the positive impact of time limits (when tied to other inducements such as job training and day care) to get people onto payrolls.

There is one risk of these 1115 waivers occurring in lieu of Congress acting to reform Medicaid. The nation already has a patchwork Medicaid system. Prior to the Obamacare expansion, the Medicaid “have and have not” states were already reasonably well defined – with few exceptions, the Northeast, Midwest and West Coast have built the most extensive and expensive Medicaid systems known to man compared to the South, Rocky Mountains and Plains State that tend to offer minimal benefits and coverage. With the ACA Medicaid expansion in 31 states and DC, the divide deepened. If the Trump administration pushes 1115 initiatives, the divide becomes an absolute gulf. So while we favor experimentation, ultimately we still favor a bipartisan compromise to plot the future of Medicaid for the nation as a whole.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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